India ups foreign ownership cap

The Indian government has proposed to raise the limit on foreign investment in the country’s insurance sector to 49 percent from 26 percent.

Indian finance minister Arun Jaitley said in his maiden budget speech that India’s insurance industry is “investment starved” and that several segments of the sector needed expansion.

He added that full Indian management and control would be kept in place, via the FIPB route.

Jaitley said:“Benefits of insurance in India have not reached a large section of the people and insurance penetration and density are very low. The government would work towards addressing this situation in multi-pronged manner with the support of all stake holders concerned. This would include suitable incentives, using banking correspondents, strengthening micro-offices opened by public sector insurance. It is also proposed to take up the pending insurance laws (amendment) Bill for consideration of the Parliament.

As part of the legislative initiatives under financial sector reforms, it is proposed to bridge the regulatory gap under the Prize Chits and Money Circulation Scheme (Banning) Act, 1978. This step is expected to facilitate effective regulation of companies and entities which have duped a large number of poor and vulnerable people in this country.”